Building On Success

Charlie Garcia is the trusted advisor for a select and growing number of extraordinarily wealthy real estate investors.

After transitioning from a multimillion-dollar construction and cement company, Garcia established his own family office,
C. Garcia & Associates in Indianapolis, and opened its doors to a small number of significant investors.

Prince: You owned and ran a large-scale construction company and you opted to leave. Why?
Garcia: For 25 years, I owned and grew a construction company, which later included a cement company. Being the CEO and president of any company with over 300 employees can be very wearisome. On top of dealing with all the day-to-day issues—issues that never abated—I was the person bringing in most of the new business. Because of my extensive network of contacts and nuts-to-bolts knowledge of the construction business, I usually brought in the larger deals. Also, when it came to these larger projects, I was very hands-on. I made sure everything went as smooth as possible, and I personally handled any and all the problems as they arose.

A few years ago, I had the opportunity to hand off the company, so I took it and set up my own family office. With the workload off my shoulders I thought I would take it easy in a sort of semi-retirement. I thought I’d use my own money and do some local real estate development projects. I’m not sure how long that lasted, probably a little more than a week or two.

Some of the very wealthy investors I’ve worked with over the years approached me about co-investing and helping them with some of the development deals they were either presently involved in or were considering. It sounded a whole lot more fun than sitting around, so I created C. Garcia & Associates Inc. It’s a combination commercial real estate developer and advisory firm.

Prince: Who are your clients?
Garcia: I tend to look at my business as having two types of clients. There are the investors and there are the construction companies.

Prince: Can you describe the investors?
Garcia: On the development side of the business, the clients range from institutions that have formed corporate syndicates to the very wealthy. The institutions are primarily banks and insurance companies. When it comes to the syndicates, it’s all about tax-credit deals. A syndicate might raise tens to hundreds of millions of dollars and invest across a number of low-income housing projects. Add some bank leverage in the form of loans, and the returns for these projects are in the 8% to 15% range. Meanwhile, the tax credits are great ways for the corporate investors to lower their taxes. For some of them, such as banks, it’s also a great way to address their community investment requirements.

The real fun and growth of my business is with the wealthy, especially the very wealthy. I’m seeing more and more really wealthy individuals, including some billionaires, interested in different types of commercial real estate projects. Some of these high-net-worth investors are interested in creating ongoing cash flows, which means building and renting out properties. Other wealthy investors are looking to build and sell with no involvement in management. It all has to do with their other investments, often the state of their ongoing businesses, and what they feel comfortable with.

Personally or through their family offices—a lot of the high-net-worth investors I talk to have family offices—I’m seeing the very wealthy interested in having some of their money working for them in commercial real estate projects. While the investment professionals they work with might understand real estate investing, I’ve not seen many who know the development process from beginning to end. There are a few, but not many. For example, one family office has a team of analysts that can make spreadsheets dance. Some of the analysts even understand the financial ins and outs for real estate investing. The complication is that they’ve never been in the trenches, and for some deals, having done the contracting, worked with the politicians and knowing the way to connect with the community can make a big difference. That’s my niche.

What’s particularly important when I put together these commercial real estate development projects with wealthy investors is being attuned to the various tax implications. I’m not a tax lawyer or accountant, but I do have a lot of experience with these kinds of projects. Still, if the wealthy investors don’t have their own real estate and personal tax specialists, I make sure that we bring in top tax talent when we put these deals together.

These high-net-worth investors are looking at commercial real estate as part of their asset allocation, but that’s not new. I’m seeing more and more of them moving away from putting their money exclusively into real estate funds and wanting to do their own deals. Also, instead of only buying existing properties, they want to include development projects in their investment mix. The reason for this interest is fairly simple: a higher potential upside. This all works for me because of my experience and track record. Besides, I like to put my own money into these same development deals.